AfDB throws Kenya new debt lifeline amid Eurobond jitters
Business
By
Brian Ngugi
| Feb 01, 2024
The African Development Bank (AfDB) has pledged a new liquidity lifeline for the cash-strapped Kenya Kwanza administration to settle its maturing obligations amid mounting concerns about Kenya's repayment ability.
The pan-African lender said on Wednesday it is in talks with the National Treasury on how to help deal with some of Kenya's massive obligations that have triggered widespread default concerns.
"The bank is engaged in negotiations with the National Treasury to explore ways to use guarantee instruments (guarantee schemes) that enhance Kenya's ability to access global financial markets to finance its budgetary needs," said AfDB in emailed responses to The Standard's queries.
"The bank is currently engaging the Cabinet Secretary National Treasury, Professor Njuguna Ndung'u, on how best to leverage the country's reserves as guarantee to mobilise additional resources to support repayment of maturing bonds and other debt obligations."
AfDB Secretary General Vincent Nmehielle told The Standard separately in an interview Kenya has shown "the ability to meet its maturing debt obligations."
READ MORE
Key CCTV cameras were offline when Rex Masai was killed
Police 'service' doesn't need new uniform, it needs a new skin
KATIBA 16: The document that gave Gen Z a voice to demand accountability
Kenyans should condemn and demand arrest of leaders fuelling violence
Tanzania Vice President Emmanuel Nchimbi resigns
KRA now targets Eastleigh, Kamukunji traders in tax compliance push
Rising India and Kenya's resemblance: Can we grow together?
Mother, daughter arrested over alleged Sh40 million Karatina land fraud
Public participation: Bar owners petition House over the Tobacco Bill
Why inclusion is becoming a business imperative, not just a workplace value
"The partial payment of the maturing Euro bond of June 2024, is a testament to the government of Kenya's ability and desire to meet its debt obligations," he said while allaying fears of the possibility of a default for Kenya," he said.
AfDB approved budget support to Kenya last year amounting to Sh12.8 billion. The loan is expected to be finalised this year ahead of disbursement. The bank said once this is done, another budget support operation of an unspecified amount is expected to be processed in the third quarter of this year.
Professor Nmehielle spoke ahead of the 59th Annual Meeting of the Board of Governors of AfDB, which will be held from May 27-31 at the Kenyatta International Convention Centre (KICC). The theme of the meeting, which will bring African Finance ministers and heads of government to Nairobi, will be Africa's Transformation and Reforms of the International Financial Architecture.
"The objective of the theme is to bring to the fore the urgent need for reforms of the international financial architecture to mobilise resources at scale and accelerate the pace of Africa's structural transformation," said Prof Nmehielle. AfDB is set to give Kenya a financial lifeline at a time economists have issued a fresh dire warning, emphasising the urgency for the Ruto government to take immediate action to avert a potential economic collapse caused by the impending Sh320 billion Eurobond repayment in just five months.
The repayment plan for Kenya's $2 billion (Sh334 billion) Eurobond, which is scheduled for June this year, has sparked controversy and is being keenly watched by global investors.
Inflation jumps to 6.6pc as cost-of-living crisis deepens ahead of 2027 polls
Kenya’s inflation rose to 6.6 per cent in August 2026, driven by soaring transport and food prices that are deepening pressure on households ahead of the 2027 elections.How US state-level pacts seek to unlock US-Kenya trade
US state-level partnerships could give Kenyan businesses more targeted routes into the American market while opening opportunities for agricultural trade, expertise and technology exchange.Fintech surpasses Sh20b in cross-border transfers as demand for faster digital payments surges
Upesi has surpassed Sh20 billion in cumulative cross-border transfers as rising demand for faster, secure digital payments reshapes how Kenyans send and receive money internationally.Project managers face pressure to build business, leadership skills
Project managers are increasingly expected to combine technical expertise with business, leadership, finance and technology skills as employers focus more on strategic value.Why regional growth should begin with one deliberate market choice
For Kenyan SMEs, successful regional expansion starts with deliberately choosing a market where demand, costs, competition, compliance and partnerships offer a realistic path to sustainable growth.MOST READ
Inflation jumps to 6.6pc as cost-of-living crisis deepens ahead of 2027 polls
BUSINESS
By Brian Ngugi